WANdisco suspends shares pending fraud investigation
Revenue guidance cut from $24m to $9m after discovery of 'potentially fraudulent irregularities'
WANdisco has suspended trading on the AIM, the sub-market of the London Stock Exchange, following its discovery of "potentially fraudulent irregularities" in reporting its sales.
The company said the potential irregularities arose in relation to received purchase orders and related revenue and bookings as represented by "one senior sales employee." It did not name the individual who might be linked to the hole in its books.
The analytics and data migration software company said it anticipated full-year revenue for 2022 could drop to $9 million, down from a previously forecast $24 million, as a result of the irregularities.
"The identification of these irregularities will significantly impact the company's cash position and lead to a material uncertainty regarding its overall financial position and significant going concern issues. The board now expects that anticipated FY22 revenue could be as low as $9 million and not $24 million as previously reported. In addition, the Company has no confidence in its announced FY22 bookings expectations," the statement said.
WANdisco has requested that its shares be suspended from trading on AIM while it conducts an investigation with its external legal and professional advisers into the nature of this activity and its true financial position. Its value was estimated at around $1 billion shortly before the announcement.
Analyst firm Megabuyte offered a bleak interpretation of the news.
"The WANdisco slow-motion car crash continues. Our primary cause for concern was always how [the company] burned through cash with no growth to show for it. Fraud is a whole other matter, and seems to have really sprung up around the time of these major contract wins as part of its commit-to-consume model.
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"While revenue was being recognized, it ended 2022 with a $44 million trade receivables balance – whether this actually results in cash generation in 2023 is now in question, and the company is now flying headfirst into a potential cash crunch," Megabuyte said.
Earlier this week, WANdisco said it was considering an additional listing on a financial market in the US.
Megabuyte said the dual-listing plans were "ridiculous" and demonstrated "an apparent lack of liquidity / confidence in its vision in London."
"Forget a dual-listing, it may not even have a UK listing after this. So is this finally the end for WANdisco?” Megabuyte asked.
The Register has contacted WANdisco for a response. It declined the opportunity to reply to Megabuyte's analysis and said it was too early to say when the financial investigation would be complete. ®
Updated to add:
WANdisco said in a statement that it appointed FRP Advisory to lead the independent investigation into the irregularities.